Google warns Motorola cuts will cost more than expected

Google Inc revised up the bill for job cuts at its money-losing Motorola Mobility mobile phone unit in the third quarter and warned of further restructuring that may result in “significant” additional charges.

Google raised its estimates for severance-related charges 9% to US$300 million from US$275 million and warned it faced another US$40 million in other costs in the quarter to quit facilities and markets.

“Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,” the company said in a statement.

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Google bought Motorola last year for US$12.5 billion, with the aim of bolstering its patent portfolio in the intellectual property fight its Android mobile system faces with rivals Apple Inc and Samsung Electronics Co Ltd.

But the Internet search giant has found itself lumbered with a restructuring headache, saying in August it would cut 20% of the Motorola Mobility workforce as it moves to make more smartphones and fewer simple mobiles.

“Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant,” Google said.

The New York Times has previously reported that Google planned to shrink Motorola’s operations in Asia by exiting unprofitable markets and abandon low-end devices to focus on a few models.

Last year’s purchase of Motorola raised investor concerns at the time that the software firm was buying into a hardware business with much lower profit margins and in which it had little experience.

Analysts were expecting Google to wind down many of Motorola’s legacy businesses to fit its strategy.

Google shares were marked up 0.3% at US$764.85 in light trading before the bell on the Nasdaq on Thursday.

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